Oct. 17 (Bloomberg) -- A flu pandemic could kill 71 million people worldwide and push the global economy into a ``major global recession'' costing more than $3 trillion, according to raised estimates by the World Bank of a worst-case scenario.

A slump in tourism, transportation and retail sales, as well as workplace absenteeism and lower productivity caused by a ``severe'' outbreak, may cut global gross domestic product by 4.8 percent, the Washington-based bank said in an internal report updated last month and obtained by Bloomberg News today. Economic modeling by the bank in June 2006 estimated GDP would drop by 3.1 percent, or about $2 trillion.

The spread of the H5N1 avian-influenza strain across Asia, Africa and Europe prompted the development of vaccines and the slaughter of poultry from Indonesia to the U.K. Measures to avoid infection would generate most of the costs, said the report, which used simulations to underline the importance of global preparations for a pandemic sparked by bird flu. Human cases of H5N1 infection have fallen by half this year as controls of outbreaks in poultry improve.

``Even with such efforts, an eventual human pandemic at some unknown point in the future is virtually inevitable,'' Andrew Burns, Dominique van der Mensbrugghe and Hans Timmer, economists at the bank, wrote in the report.

Pandemic Threat

The threat of a flu pandemic, raised by the World Health Organization in 2003, persists because the H5N1 virus is entrenched in parts of Asia and Africa, the World Bank said. Such a contagion would start when a novel influenza A-type virus, to which almost no one has natural immunity, emerges and begins spreading. Experts believe that the so-called 1918 Spanish Flu pandemic, which may have killed as many as 50 million people, began when an avian flu virus jumped to people.

``Because such a pandemic would spread very quickly, substantial efforts need to be put into place to develop effective strategies and contingency plans that could be enacted at short notice,'' the economists said. ``Much more research and coordination at the global level are required.''

The World Bank, which funds projects to alleviate poverty, is working with developing countries to improve hospitals and laboratories, enabling better surveillance and management of avian flu, and to prepare for a possible pandemic.

At least 387 people in 15 countries have been infected with the H5N1 virus since 2003, according to the World Health Organization. Almost two of every three cases were fatal. So far this year, 36 cases have been reported, down from 74 in the first 10 months of 2007.

Eliminating Disease

More than 50 of the 61 countries that have experienced an H5N1 outbreak in poultry in the past five years have successfully eliminated the disease, according to the United Nations.

In Vietnam, one in eight domestic fowl died from the disease or were culled to prevent its spread in 2004. If the virus were to become as entrenched in poultry flocks globally, it would trim 0.1 percent from global GDP and as much as 0.7 percent in Latin America and the Caribbean, according to the World Bank report.

World leaders will be asked to donate about $500 million -- the amount required annually to fund bird flu control efforts and prepare for a pandemic -- when they meet Oct. 24 to 26 in Sharm El-Sheikh, Egypt, for the Sixth International Ministerial Conference on Avian and Pandemic Influenza, a UN official said.

`Massive' Cost

``The potential cost of a human pandemic is massive compared with the quite modest sums required to ensure pandemic preparedness,'' said David Nabarro, UN senior coordinator for avian and pandemic influenza, in a telephone interview from Geneva today. The funds ``must be coupled with political commitment to ensure that all parts of government, civil society and the private sector are prepared to keep functioning in the event of a pandemic.''

A ``mild'' pandemic, similar to the Hong Kong flu of 1968- 69, could kill about 1.4 million people and cut global GDP by 0.7 percent in the first year, according to the World Bank's latest estimates.

Seasonal flu epidemics result in 250,000 to 500,000 deaths annually, mostly among those older than 65 years, according to the World Health Organization.

A ``moderate'' pandemic characteristic of the 1957 Asian flu could kill 14.2 million people and shave 2 percent from the global economy in the first year, the bank said. Some forecasts have estimated deaths during a ``severe'' pandemic at as high as 180 million to 260 million, the report said.

Changed Behavior

Changed behavior by individuals in the face of a pandemic, such as reduced air travel in order to avoid infection in the enclosed space of a plane, avoiding travel to infected destinations and spurning restaurants and mass transport, could account for 60 percent of costs during a pandemic, the bank said.

``People's efforts to avoid infection are five times more important than mortality and more than twice as important as illness'' in terms of economic impact, the authors said. In the worst-case, they assumed that air travel would slump by 20 percent for the whole year, and that tourism, restaurant meals, and use of mass transportation would decline by the same amount.

``Given the tremendous uncertainties surrounding the possibility and eventual nature of a pandemic inflation, these simulations must be viewed as purely illustrative,'' the report said. ``They provide a sense of the overall magnitude of potential costs. Actual costs, both in terms of human lives and economic losses, may be very different.''

To contact the reporter on this story: Jason Gale in Singapore at j.gale@bloomberg.net.

Last Updated: October 17, 2008 07:08 EDT